Oil short-selling rears its ugly head as shale fears mount

Bloomberg

Short-selling is creeping back into the oil market as fears increase that the US will be awash with oil again. Hedge funds boosted bets on falling West Texas Intermediate crude prices by the most this year after American production surged to record levels. While OPEC this week reaffirmed its commitment to rebalancing the market, US fields are forecast to be gushing 11 million barrels a day by October. “If you’re taking a speculative short position, you’re looking at what US production is going to do,” Ashley Petersen, an analyst at Stratas Advisors, said in a phone interview. “There’s starting to be a little bit of a turn in sentiment.” As shale producers put the US on course to soon become the dominant global producer, the enthusiasm that sent crude futures beyond $66 a barrel earlier this year has faded. For now, the output curbs from the Organization of Petroleum Exporting Countries and its partners have managed to keep prices mostly above $60 a barrel.